A tax court judge ruled June 26 that Morristown (N.J.) Medical Center failed to satisfy the legal test that it operated as a nonprofit, charitable organization, and further held that the hospital should pay property taxes on nearly all of its property, according to an NJ.com report.
New Jersey Tax Court Judge Vito Bianco ruled that Morristown Medical Center failed to operate as a nonprofit, charitable organization for tax years 2006 through 2008. Due to that finding, the judge ruled that the hospital should pay taxes on all of its property, with the exception of its auditorium, fitness center and visitors' garage. There is a separate matter pending regarding Morristown Medical Center that could result in the hospital being ordered to pay property taxes for 2009 through 2015 as well.
The decision is not being taken lightly, as it could cost the hospital between $2.5 million and $3 million per tax year. The ruling has caught the attention of other nonprofit organizations in New Jersey and Atlantic Health System, which operates Morristown Medical Center.
An Atlantic Health spokesman, Rob Seman, released a statement saying, "Yesterday's decision by Judge Bianco regarding property taxes is disappointing, and has serious consequences for both Morristown Medical Center as well as other healthcare systems in the state," according to the report.
The concern appears to be well-founded, as Judge Bianco made statements in his opinion about not only Morristown Medical Center but also about all nonprofit hospitals in the state.
"If the property tax exemption for modern nonprofit hospitals is to exist at all in New Jersey going forward, then it is a function of the legislature and not the court to promulgate what the terms and conditions will be," Judge Bianco wrote in his opinion, according to the report. "Clearly, the operation and function of modern nonprofit hospitals do not meet the current criteria for property tax exemption under…applicable case law."
Morristown Medical Center has not decided whether it will appeal the decision, according to the report.
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